Colombia Suspends Drummond's Port License After It Dumped Coal Into Sea

(This article was originally published Wednesday.)

--Drummond's production and transportation of coal from mines to the port unaffected

--Drummond's port license could be reinstated within a week

--Official says government should be the first notified in these types of emergencies

By Dan Molinski

BOGOTA--Colombian environmental authorities on Wednesday yanked Drummond Co.'s license to load and unload coal at its main port after the company dumped nearly 1,900 metric tons of it into the sea nearly a month ago.

A spokesman for Colombia's Environment Ministry said the decision to pull Alabama-based Drummond's port license was taken by the government's National Authority of Environmental Licenses. The spokesman said all of Drummond's other operations, including production and transportation of coal from the mines to the Atlantic port, remain unaffected by the decision.

He also said the port license could be reinstated within a week so long as Drummond meets certain criteria, which he didn't specify.

Drummond Colombia, which is 80% owned by Drummond and 20% by Japanese trading house Itochu Corp. (8001.TO, ITOCY), is accused of dumping coal into the sea on or around Jan. 12 when boat captains tried to prevent the barge from sinking. Environment Minister Juan Gabriel Uribe told local media that while he realized the company may have faced an emergency situation in which the captain may have needed to act by dumping the coal, he said the company erred in not notifying authorities about the incident for more than a week.

"In these types of emergencies, the first to be notified should be the government," Mr. Uribe said.

A spokeswoman for Drummond in Colombia said the company had no immediate comment. A woman reached by telephone at the press office in Drummond's Birmingham headquarters also declined to comment.

Beyond the suspension of the license at the port, Drummond also faces a possible fine over the incident. Some reports suggest the fine could be around $1.5 million, but an Environment Ministry official said any specific figure is pure speculation.

Drummond aims to produce more than 30 million metric tons in Colombia this year after producing around 27 million in 2012. The firm has been in Colombia since 1998, making it one of the first major coal firms to enter Colombia, a country that now touts itself as one of the top five coal exporters in the world. Royalties and taxes from the coal industry have become a vital source of revenue for the Colombian government.

Colombia's coal sector also includes companies such as BHP Billiton Ltd. (BHP.AU, BHP), Glencore International PLC (GLEN.LN, GLCNF) and Anglo American PLC (AAUKY, AAL.LN).

Write to Dan Molinski at [e-mail]

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